What do 1980, 1989 and 2003 have in common? They were the peak sales years for LPs, cassettes and CDs respectively. After that, a very slight resurgence in vinyl aside, it was all downhill.

Billboard magazine has an interesting piece in which they suggest that perhaps 2012 might join that list – as the year that saw peak sales for music downloads, with streaming services like Spotify, Rdio and now, of course, iTunes Radio the heir apparent …

The fall in music downloads is small so far, but the numbers do seem suggestive of a trend.

Digital purchases are down almost across the board this year. Track sales are down 4.4% through Nov. 24, according to Nielsen SoundScan. Track-equivalent albums, where 10 tracks equal one album, are down 2.1%. Total digital purchases — tracks and digital albums — are down 4%.

Track sales have been falling all year. In the first half of 2013, U.S. consumers bought between 23 million and 25 million tracks per week. In October and November, weekly track sales dropped below 20 million.

A piece in the NY Times quotes Doug Morris, chairman of Sony Music Entertainment, as seeing the same pattern.

The buying habits of music lovers are changing. Rather than buying physical records, or even digital downloads, consumers are starting to prefer buying music on demand from streaming services.”

In the same piece, Neilsen says that YouTube music videos are the most popular source of music among younger listeners.

Billboard points to catalog sales – everything other than new releases – as a key indicator of the state of the nation for a music format.

The current weakness in catalog sales mimics what happened with CDs, according to NPD Group analyst Russ Crupnick, who says consumers began showing “apathy” about CD purchases roughly eight to nine years ago. “People were starting to say, ‘I’m good. I have all the catalog I want. If you don’t ‘wow’ me with something new, I’m going to stay on the sidelines.’”

The big question being asked of the streaming services, of course, is whether their business model is sustainable. Of the 24M users Spotify reported back in March (the last time it talked numbers), only a quarter of them had paid subscriptions. Music downloads and physical media sales are still where the money is so far – generating $5.6B revenue against around $1B for streaming services – but that’s a pretty rapid shift for a format that, until recently, appeared to be much better at attracting listeners than parting them from their cash.

But if anyone is well-placed to make money from streaming music, it has to be the company which turned a break-even service designed to promote hardware sales into a multi-billion dollar business in its own right. Apple’s move into the streaming music business is looking like it was particularly well-timed.

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18 Responses to “Have music downloads hit their peak, with streaming taking over?”

  1. Shaun G says:

    I suspect Apple are simply holding back their move to streaming services until the revenue projections say that they would make more money from streaming subscriptions than sales downloads. If they do switch I hope they continue to offer a download to buy option but with better quality 24bit music. That would help to differentiate the cheaper streaming subscription from the more expensive and better quality download to own option. And if they do I hope they automatically upgrade everyone’s iTunes music library to the higher quality music for free through iCloud. That would at least compensate people like me who’ve purchased a lot of iTunes music since they went to 256 quality.

    If they do ever offer a streaming service I strongly suspect that it will only be available on Apple hardware through an iOS and/or AppStore App. That would at least make iPhones and iPads look more attractive against the competition, most of which are already offering a free streaming music service if you buy their smartphones.

  2. “Apple’s move into the streaming music business is looking like it was particularly well-timed.”

    And you thought it might have been, what? A thoughtful lark?

  3. Tallest Skil says:

    Not really. People ARE generally stupid, but they’re not stupid enough to not want to own their music.

  4. hmurchison says:

    Music lovers will want to grow their library of music and thus “own” it. More casual music listeners will want to have access to as much music as they can for as little money. iTunes downloads coupled with iTunes Radio strikes a nice happy balance.

  5. In the last 12 months I have completely flipped, from being anti-streaming/radio and owning your music, to wanting everything streaming. Though I still want the full album experience with some artists, like Samuel Lane, check him out, unknown Brit with a very different style, most of the time I just want streaming now. I have broadened my genres though streaming. 1 year ago I had zero interest in dance music, now I listen to it all the time. Ironicly part of the reason is Apple’s vomitingly (word?) pathetic iTunes Match implementation.

  6. Shaun G says:

    Re the replies to my OP: Do any of you understand the difference between a streaming service and a radio service? Apparently not so I’ll explain. Spotify is a streaming service. You login, select an album or track and it plays just as if you had selected a track from your own iTunes music library. iTunes Radio is a radio service. You select the genre and it selects the music. You cannot select what song to play. It’s a radio service NOT a music streaming service. Please know what you’re talking about before you criticise me next time.

    • Ben Lovejoy says:

      Both types are streaming services, one allows total control of the stream, the other doesn’t.

      • Shaun G says:

        No it’s not. By that definition BBC Radio 1 would be a music streaming music service or whatever radio station you listen to in the morning would be a streaming music service. Streaming Music Service = Total Control. Radio Service = No Control. It’s very simple. Spotify replaces your iTunes Music Library and music downloads to buy, iTunes Radio does not replace anything other than maybe your internet radio. Next you’ll be telling me that BBC or NBC is a video streaming service rather than a TV station.

      • Ben Lovejoy says:

        Streaming simply means that content plays immediately, rather than having to be fully downloaded first, nothing more. I think you are confusing ‘streaming’ with ‘on demand’. See

      • Shaun G says:

        What content? You can’t select your content on iTunes Radio. It’s the same as listening to the radio. So you are basically saying that all conventional radio is a music streaming service? That makes things very confusing. For me a streaming service is one where you control the content played and a radio service is one where you don’t control the content played. Ok I guess if you want to call one On Demand Music Streaming and the other Not On Demand Music Streaming then fine but you didn’t say that in your article. You implied that iTunes Radio was the same as other streaming services like Spotify and Rdio which it absolutely is not.

      • Ben Lovejoy says:

        Apple calls it a streaming service; I call it a streaming service; the music industry calls it a streaming service; the technology industry calls it a streaming service. You are free not to.

      • Shaun G says:

        Ok fine but thank heavens that some of us are better informed that these people and don’t fall for Apple’s marketing tricks. iTunes Radio is a waste of space. Spotify and Rdio are excellent. I know where my money is going.

  7. for what it’s worth, my money is going there, where i keep a copy of my music. meaning, licensed to listen to it as long is my hard drive has a copy of it.